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January 8, 2008

Prime Time for HarvestMark's Food-tracing Technology



HarvestMark Inc.

203 Redwood Shores Parkway, Suite 620 Redwood City

866.768.7878

www.Trimble.com Employees: Fewer than 50

Funding: $10 million Series B, undisclosed first round

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A new produce-tracking technology out of Redwood City has the potential to prevent millions of dollars in losses during food-safety scares.

HarvestMark Inc. and its food-tracing technique, dubbed HarvestMark, has signed on sellers of tomatoes, berries and watermelons who want to minimize the impact of salmonella and E. coli outbreaks by providing anyone the ability to instantly track the origin of the produce. Because contamination can often be traced to a specific growing region, that information can help consumers, restaurants and grocery stores choose produce grown in other areas rather than banning the food item from shelves and menus.

HarvestMark announced July 24 that it raised $10 million in venture capital from Granite Ventures LLC, as well as previous investors ATA Ventures and Thomvest Ventures. The funding will help HarvestMark expand its sales and marketing staff for tracing and authentication technologies. The company plans to move to a larger Redwood City office in mid-August and hire regional salespeople in the Midwest and Southeast, said HarvestMark Chief Executive Scott Carr.

HarvestMark developed the technology in 2005 to help guard against counterfeit items, but company executives realized the demand for tracing food, pharmaceuticals, electronics, alcohol, tobacco and children's toys.

HarvestMark, launched in late 2007, makes up 60 percent to 70 percent of the company's business.

"Consumers want more transparency about the products they purchase," Carr said. "They've been taught that behavior through various providers, whether it's FedEx giving them the ability to track packages, or Amazon.com letting them track orders, or even Web sites to track when a plane has landed."

The U.S. market for tracing and authentication was $34.2 billion in 2006, according to BCC Research. Growing consumer demand for information will drive the market to $43 billion by 2012, according to an August 2007 report by the Massachusetts-based research group.

Concerns about lead paint on toys and contaminated spinach prompted 85 percent of consumers to say they'd buy a traceable item over one that wasn't traceable, according to a HarvestMark survey of 2,700 consumers in late 2007.

Half of respondents said they were less confident in produce than a year ago, the survey showed.

"At the time of a recall event or food-safety crisis, communication is critical," Carr said. "When you're a retailer or produce brand, you want to communicate your product is safe. Imagine if you can say the product you have in your hands is from an area that's been cleared. It's important to narrow the impact of recall."

The HarvestMark tracking process starts with the grower. Produce packers tag each item or case with a HarvestMark label, which displays a bar code and numbers that consumers or retailers can either type into a Web site or scan at an in-store kiosk. HarvestMark plans to place kiosks in grocery stores in the fall through sponsorships and partnerships.

The packagers decide what information to supply, but Carr said he expects the list to include picking date, state of origin, nutritional information and farming methods. Food growers are required to track much of that information already, but HarvestMark goes a step further to provide consumers access to that information.

Watsonville's Driscoll Farms started using HarvestMark to track its berries in May. Watermelon grower Leger & Son Inc. of Georgia and Florida signed on in April.

HarvestMark started working with tomato-packager Delta Pre-Pack Co. Inc. and grower Ace Tomato Inc. on July 24, just as the tomato-salmonella scare was coming to a close, said Parker Booth, president of the two Manteca-based tomato companies.

The U.S. Food and Drug Administration initially warned consumers not to eat tomatoes, which prompted restaurants and grocery stores to clear their shelves and some farmers to leave tomatoes on the vine. The United Fresh Produce Association estimates nationwide losses of $200 million.

Although California-grown tomatoes were put on the safe list within days of the warning, grocers and distributors didn't have an easy, quick way to verify the origin of their produce, Booth said. Instead, clients called, and Delta employees would search through paperwork and respond, but the process could take anywhere from 30 minutes to two hours, he said.

"HarvestMark lets them instantaneously get information, which cuts the workload for us and gives them 24/7 access," he said.

Beyond produce tracing, HarvestMark provides marketing opportunities, Booth said. Delta can solicit feedback about quality and tell customers about tests that prove the water and soil are free of pathogens, he said.

"The more that people understand what you're doing in the field and the product, the more attachment there is," Booth said. "This technology can help us develop brand loyalty." Emma Ritch can be reached at 408.299.1830 or eritch@bizjournals.com.